Demand exceeds supply, so home prices will keep climbing in Utah

SALT LAKE CITY — Home prices in Utah will keep on rising as long as demand keeps outpacing supply. But a housing expert sees price increases coming down to single digits, more closing matching the pre-pandemic era. 

The median price for a home has climbed to nearly $600,000 in both Utah and Salt Lake counties.

Blame a lack of supply and surging demand for rising housing prices. Experts say prices will keep going up as long as demand outstrips supply, which is now low.

“In Salt Lake in just one year, prices have jumped 23% in one year,” Dave said.

Debbie said in the first quarter of last year the median price for a house in Salt Lake City was $340,000, citing a report from the US Federal Housing Finance Agency:

• Q1 of 2020: $304,000
• Q1 of 2019: $285,000
• Q1 of 2018: $263,000 
• Q1 of 2017: $240,000

“If you found a house right now for 240,000 . . .”
“You’d think you were in Kansas,” Debbie said, finishing Dave’s thought.

Ask the expert

Dejan Eskic, a senior research fellow with the Kem C. Gardner Policy Institute, told KSL’s Dave & Dujanovic that there are about 5,000 fewer houses on the market now compared with the housing supply before the pandemic.

Eskic said a crop of 30-somethings seeking their first home are driving demand in Utah and across the nation.

“[They] are finally getting their life together and moving out of their parents’ basements. And they’re starting families. Nationally, we have roughly 33 million people hitting that first-time homebuyer age of 32,” he said. “In Utah as a share of our population, we have an even greater percentage.”

Eskic also said the supply of homes is low in Utah.

“Prior to the pandemic, we had around this time of year roughly 7,000 to 8,000 homes for sale,” he said. “Right now we have about two [2,000].”

Eskic said a home in Utah now typically sells in six days.

“A healthy market apartment vacancy is 4% to 5% Right now we’re at 2%,” he added.

And, by permitting homes at record levels but not completing them because of labor and material shortages, builders compound the situation according to Eskic.

“Unfortunately, that’s why we’re seeing these crazy record prices,” he said.

“Anybody who’s in the market right now looking for houses is wondering: Are we going to at least see prices start leveling off where they’re not shooting up 20%, 25% every year?” Debbie asked.

Eskic said the expectations are for home prices to moderate downward to single-digit growth like the housing market was before the pandemic.

“That’s our best bet right now — that we stop seeing double-digit increases, and we’ll just go back to a healthy 5% to 6% increase,” he said.

Related: Rising interest rates put homes out of reach for 2 of 3 Utah families

 

Dave & Dujanovic can be heard weekdays from 9 a.m. to noon. on KSL NewsRadio. Users can find the show on the KSL NewsRadio website and app, as well as Apple Podcasts and Google Play.